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Married... with Children

Updated: Jul 20, 2023

When I was a kid, my dad managed the Brown Shoe Fit Co. store on Higuera Street in San Luis Obispo, California. It was a Main Street family shoe store that sold the old-folks classics-- Florsheim, SAS, Naturalizer and Dexter. Mostly stuff that I hated but was highly coveted by people over the age of 70.

My friends gave me my fair share of s*** for my dad’s profession; he was basically Al Bundy right when Married… with Children was just coming on the air. But my mom didn’t have to work outside the home when I was young. My parents owned their first house at the age of 24. I got a full-ride scholarship, but my parents had the means to send me to any college I wanted. We spent a couple of months every summer at my grandparents’ lake house, my parents took multiple week-long out-of-state ski trips every year, and Dad always owned and flew his own airplane.

Life wasn’t that bad living on $35k/year in California in the ‘80s; in fact, that was 16% higher than the median wage.


Until recently, I was not aware that Senator Elizabeth Warren and her daughter Amelia Warren-Tyagi wrote a book eighteen years ago called The Two-Income Trap: Why Middle-Class Parents Are Going Broke, and I was greatly surprised by it. In the book, Warren argued that today's middle-class parents are increasingly trapped by financial meltdowns and that mothers going to work have made their families more vulnerable to financial disaster than ever before.

Warren’s central argument in the book is that the rise in household income over the previous twenty years was almost entirely driven by the increase in the number of two-earner families. …And adding income by adding a second worker is vastly different than rising pay for a single worker. To wit, today's two-income family earns 75% more money than its single-income counterpart of a generation ago but has 25% less discretionary income to cover living costs.

According to Warren, the increased ubiquity of two-earner households played out by leaving families in more precarious financial circumstances with more brittle budgets that are far more prone to slipping into insolvency in the event of a problem. “If her husband was laid off, fired, or otherwise left without a paycheck,” Warren and Warren-Tyagi wrote, “the stay-at-home mother didn’t simply stand helplessly on the sidelines as her family toppled off an economic cliff; she looked for a job to make up some of that lost income.”

Similarly, if a family member got sick, mom was available as an unpaid caregiver. “A stay-at-home mother served as the family’s ultimate insurance against unemployment or disability-- insurance that had a very real economic value even when it wasn’t drawn on.”


According to the Population Reference Bureau, in 2002, only 7 percent of all U.S. households consisted of married couples with children in which only the husband worked. Dual-income families with children made up more than twice as many households. Even families with two incomes and no children outnumbered the traditional family by almost two to one. And according to the Brookings Institute, average middle-class household income grew from $57,420 in 1979 to $69,559 in 2018, but average income would have increased to just $58,502 in 2018 without women’s contributions-- women accounted for 91% of the total income gain for their families.

Of course, when we consider the inflationary pressures over the last few decades in product markets such as housing and childcare coupled with those relatively flat wage trends, it’s little wonder that the number of dual-income households has continued to steadily increase.


The effects of feminism on our economy will continue to be the focus of study and debate for a very long time. I personally think it has been better for Apple and Google than for most families, but that’s just an opinion. However, opinions aside, the existing data on the subject are impacting our outlook for equities in the coming year.

How? We think any moves to position portfolios predicated on the Fed pivoting on interest rates in Q1 is premature, and that’s partly because of our view of the labor market. It still seems likely to us that the Fed will hike rates until unemployment hits 4.5%, which would equate to millions of households losing a breadwinner. People can argue about the definition of what constitutes a “recession,” but anybody arguing that job losses of that magnitude would not be a recession would strike me as disingenuous.

Based partly on Senator Warren’s almost twenty-year-old thesis that middle-class households are more likely to break in that scenario, we recommend some caution. As I told one friend last week, we’re still at the party and still dancing, just a little closer to the exit… and with an eye out for this week’s jobs report. It’s like looking over my shoulder for my dance partner’s boyfriend.

There were eight rallies in The Great Depression that averaged 24% on your way to losing 86% of your money over 33 months. If you go back and look at the tech bubble, the financial crisis, or The Great Depression, you had these kinds of rallies that repeatedly sucked people back in. Historically, stocks do well in the December after a mid-term-- and the last couple of months have been great— but we continue to view these moves as rallies within the confines of a bear market.

We recommend prioritizing profitability over revenue and sticky income over the uncertainty of capital appreciation. Market opportunities have already reset, and going into next year, we favor:

  • stocks with durable cash flows

  • quality bonds with significant coupons

  • alternatives with volatility-reducing attributes.

Click here to invest with Chad.

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